Political Eye: The ABC’s of Interventionism

Let’s face it, on economic matters so far, Reagan sounds pretty good — or at least far better than what we’ve been hearing from Presidents for a long while. He says he’s for tax cuts (sure, he means cutting tax rates, not the actual dollar amounts), and spending cuts (I know, I know; he’s only cutting the rate of increase so that actual spending will be higher), and decontrolling oil prices (yeah, yeah, the windfall profits tax is still there), and deregulating industry (well, except maybe for trucking and a few others). Why, he’s even suggested that inflation has something to do with the supply of money in the economy; that there’s more to it than high prices. Isn’t all this preferable to higher taxes, higher spending, more regulation, and scapegoating Arabs every time the price of hamburger goes up?

Sure it’s preferable. In the same way a cold is preferable to pneumonia.

Instead of just gratefully blowing our noses, we should be looking for ways to stay out of the oxygen tent. We should be checking to see if any of the viruses responsible for the serious disease are still there, even if dormant.

The virus of interventionism is still there, and now in a more virulent form than under Jimmy Carter. The central message of the Reagan foreign policy appears to be, “We will intervene,” without further elaboration, qualification, or reservation.

I don’t know, maybe I’m hallucinating, but every time I watch President Reagan on TV talking about how he’s going to free up the economy, I see Al Haig standing next to him saying, “And if that doesn’t work, we can always have a good war.”

I realize that’s a monstrously cynical thing to say, particularly in this Era of Good Feeling. It’s considered the height of tacky to suggest that anyone, even Al Haig, would actually want war. No one wants war.

Actually, it would make things a lot easier if Haig or Cap Weinberger or someone in the Reagan Administration would announce at a news conference, “Ladies and gentlemen, today we decided to have a war. Not a great big nuclear war, just a medium-sized conventional war, just big enough to boost American industry, create jobs, and get people’s minds off the problems of the economy.” “Mr Secretary, Mr. Secretary!” the reporters would ask, “have you decided where you’re going to have this war?”

“We’re waiting for the Task Force on Economic Revitalization to submit its report,” would come the reply. “We’ll be releasing full details on May 4. But I can tell you that we’ve narrowed it down to a choice between Central America and the Horn of Africa.”

Like I say, this sort of thing would make political commentary a whole lot easier, because then we could focus on the major issue of war, which is that people are killed in large numbers. Instead, unfortunately, we’re given phrases like “stopping terrorism” and “not backing down” and “protecting our vital interests,” and since you’d have to be un- American not to favor all that, few people like to speculate about what the ultimate consequences of such policies might be.

One consequence might be war and killing people — but let’s not talk about that, it’s unpleasant and it leads to awkward gaps in the conversation.

Hmm, yes. (polite coughing and drumming of fingertips on the coffee table)

An even more certain consequence of an aggressive, interventionist foreign policy is that it will cause the failure of any free market oriented economic program that President Reagan comes up with. For the domestic economy, the implications of such a policy are simply devastating.

First and most obvious is the contradiction between “making government live within its means” — cutting taxes and spending, and reducing the budget deficit, even a little bit — and increasing the military budget by tens of billions of dollars, as Reagan has said he will do. Supply-side economists insist this really isn’t a problem at all; if everyone gets a small tax break, the economy will take off like a rocket (a Titan missile, no doubt), all this new wealth will be created, and government will get more revenue while everyone pays proportionately less. Sort of like the miracle of the loaves and the fishes.

Suppose the supply-siders are right, and we really can get two pounds of flour out of a pound of wheat. What would be so bad about a huge military budget and an interventionist foreign policy then?

The price tag for intervention doesn’t just stop with the added costs of new tanks and bombers and missiles. Before we ever got to the point of having to use them, we will have spent billions of dollars in foreign aid, military and economic, to prop up the unstable regimes of dictators all over the world who, we’re told, are our friends. The price of foreign aid between 1976 and 1980 was $30 billion, and that was with an administration that drew a few lines, expressed in terms of “human rights,” before deciding who would be the beneficiaries of our bounty. The Reagan administration shows no inclination to draw any lines whatsoever, and how many “friendly,” unstable dictatorships are there in the world who need our money to stay alive for another month? A is for Argentina, B is for Botswana, C is for Chile, all the way through Z for Zaire. So the potential combined burden on the taxpayers for weapons buildup and foreign aid just over present levels is staggering.

Moreover, all this spending doesn’t even accomplish its ostensible purpose: to defend “our” allies, to “stabilize” their regimes against the Marxist hordes, and to secure “our vital interests”—usually access to natural resources or the protection of American business investments. Your typical friendly dictator will use his several hundred million dollars to enlarge his public sector at the expense of his private sector, to equip his army, build roads, erect government buildings, and pay the interest on the loans he’s already obtained from American banks. This in itself is inherently destabilizing; as the public sector gets richer, the private sector gets poorer, until the middle class throws its support to whatever group of ideological revolutionaries appear to have the best chance of toppling the dictator. When this happens, the dictator is as good as gone; the U.S. abandons its investment and begins frantically to negotiate with the new rulers and start the cycle all over again.

Note the neat little redistribution-of-wealth scheme apparent in all of this. American taxpayers are being soaked to enable these countries to pay back loans to American banks, to pay the bills of American overseas corporations which are building the roads and government offices, and to pay the American manufacturers of the weapons and munitions which have gone in as military aid. All the while that our efforts to “stabilize” the regimes of our allies are failing, favored American companies are getting millions of dollars of subsidy, courtesy of the American poor and middle class.

Any suggestion that an interventionist foreign policy is necessary to defend “our great free enterprise system” is un-adulterated hogwash. The exact opposite is true. Interventionism adds billions of dollars to the tax burden, subverts all attempts to build healthy market economies in other countries, and amounts to a systematic welfare program for those American businesses fortunate enough to be in on the scheme.

Luckily for the interventionists, this mass perversion of the free market tends to take a long time, perhaps even twenty or thirty years. In the short run, our government can pride itself on protecting our security interests while our military contractors and overseas corporations, with their employees and stockholders, can get wealthy.

In the long run . . . well, as Keynes is supposed to have said, in the long run we are all dead. I’m sure Al Haig would agree.

Chris Hocker is the publisher of LR. His “Political Eye” column appears monthly.